ABC Ltd. is a manufacturing company that produces and sells a product called Widget. The company has provided you with the following information:

• The company produced 50,000 units of Widget in the current accounting period
• The total cost of producing these units was $500,000
• The company sold 40,000 units of Widget at a selling price of $25 per unit
• The company has fixed overheads of $100,000 and variable overheads of $2 per unit produced
• The company uses the absorption costing method to allocate overheads to products

Using the information provided, calculate the following:

a) The cost per unit of Widget using absorption costing

b) The gross profit and gross profit margin for the period

Assume that there were no beginning or ending inventories of Widget during the period.

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